When it comes to short term investment options for one to three year people want their money to be safe and secure, so they consider to park their money at saving accounts. Which end up giving them a return of three to four percent per annum. Mentioned below 06 short term investment options which is safe and secure as well as gives you more returns then your saving account.
- Debt mutual funds
- Short term government bonds
- Money market account
- Investment in digital gold and silver
- Investment in NCDs
- Investment in FD
1. Debt mutual funds:
This investment will not give you guaranteed returns however as per historical data this investment will give you a return of 6 to 9 % post tax returns. If you will do some research and find some good debt mutual fund you can get up to 10% returns easily which is way more higher then the saving account returns.
Debt mutual funds invest in government securities, corporate bonds etc, which gives it stability and security against fluctuations in market. Debt funds diversify the investment in various government securities to ensure stable returns. However there is no guarantee of consistent returns, you can expect somewhere between 6% to 9%. If you want to park your money for short duration without worries of market fluctuations you can definitely consider this short term investment option over traditional saving account method.
2. Short term government bonds
A bond is like a loan. When you buy a bond, you’re lending money to a company or government. They promise to pay you back after a certain time, plus interest. Bonds help these entities raise money for different projects and needs.
Get the details about Short term government bonds on the official website of RBI by clicking here https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=711
This investment will give you a guaranteed returns but the returns will be lower compared to other investment options. The bond provides returns in various categories to the bond holders for example fixed maturity ( where the bond having a predefined maturity date where the government repays the principal amount the the bond holders ), Regular interest payments ( these bonds pays the periodical interest to the bond holders like quality, semiannually or yearly), there is some other option are also available the investors can chose accordingly.
These investment is a good option for short term investment option where the risk is almost zero with a promising returns between 7 to 9 %.
3. Money market account
A money market account (MMA) is a type of savings account that typically offers higher interest rates than a regular savings account. However, unlike a savings account, which often has no minimum balance requirement, MMAs usually require a higher minimum balance to earn the higher interest rate. Additionally, MMAs may offer check-writing privileges and debit card access, which are not typically available with standard savings accounts. Furthermore, while savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC), MMAs may be insured by either the FDIC or the National Credit Union Administration (NCUA), depending on whether the account is offered by a bank or a credit union. Overall, money market accounts provide a flexible and higher-yield savings option compared to traditional savings accounts, making them a popular choice for individuals looking to earn a competitive return on their savings while maintaining liquidity and accessibility.
Considering it’s benefits you can definitely look in park your hard earned money for better returns then your savings account in money market account. This is one of the best short term investment option for new generation investors. Learn more about Money market account from here https://www.forbes.com/advisor/banking/money-market-account/what-is-a-money-market-account/
4. Investment in Digital gold and silver
The gold or Silver investment is another option if you want to minimize the risk of short term investment. While the physical gold investment more of an emotional investment, these days many fin tech companies provides the option to investment in digital gold. In this type of investment there is no making cost involved and no worries about storage unlike physical gold. Generally the digital gold investment is actually backed by the physical gold by the companies, where you can redeem your investment return value by selling your holding gold.
You can definitely consider it as a risk free short term investment option instead keeping money in traditional savings account.
5. Investment in NCDs
NCD stands for Non Convertible Debentures. As it’s name suggest it can not be converted into equity. The NCDs gives you a fixed return and a fixed maturity period. The interest can be earned monthly, quarterly or annually as per the scheme. The interest rates varies between 8 to 12%. However the investors must invest NCDs with higher rating such as AAA+ or AA+.
The NCDs provides good returns with low risk and tax benefits. It’s a better short term investment option for new generation people.
6. Investment in FDs
FDs considered to be the safest investment option to park money without any risk. Now banks provides auto sweep facility where you can park your money in FDs directly from your savings account. This is the simplest method of earning more returns then your saving account. Some banks are also giving around 8.5% return on FDs.
Conclusion
These days you need to educate yourself about various short term investment options available to park your money for better returns with minimum risk. The above 06 investment options are best for short term investment options. Investors may consult a financial adviser to figure out which one is best suited for you as per your risk appetite. Feel free to ask any query in the comment section below, Thank you.
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